Guaranty Raising Money with Icahn's Assistance

Guaranty Raising Money with Icahn's Assistance

Article excerpt

The billionaire corporate raider Carl Icahn is one of several investors giving Guaranty Financial Group Inc. in Austin a large cash infusion.

The $16.4 billion-asset Guaranty said over the weekend that it intends to raise $600 million in a private placement, and that "significant amounts" of the equity and debt it would issue in the deal would go to Icahn Capital LP and affiliated entities.

The $600 million, which includes a previously announced $38.4 million investment from the billionaire Robert Rowling, would be on top of another capital-raising initiative announced last month. Guaranty has said it would raise up to $350 million through a rights offering.

Guaranty, an independent company only since December, said it needs to raise more capital to fortify its balance sheet and support future growth.

Brett Rabatin, an analyst with First Horizon National Corp.'s FTN Midwest Securities Corp., speculated that it could be shoring up capital in anticipation of further losses related to real estate.

Guaranty lost $10 million in the first quarter as nonperforming assets, particularly loans to residential builders in its California markets, increased 59% from just three months earlier, to $284 million.

"They're probably doing the smart thing and making sure they have adequate capital for a worst-case scenario," Mr. Rabatin said.

Mr. Icahn did not return a call for comment, but he said in a Guaranty press release that he was "excited" that the investment "will assist Guaranty in its efforts to work through current market conditions."

The activist investor - who has been in the news lately because of his ongoing battle to oust Yahoo Inc. …